Virgin Wines launches new technique focusing on £100m in annual income

Virgin Wines has announced a new strategy to increase its annual revenue to at least £100million over the next five years.

The AIM-listed group, one of the country’s largest direct-to-consumer wine sellers, plans to achieve this in part by expanding customer numbers and taking advantage of its commercial partnerships.

It also intends to develop a mobile app and invest in its Warehouse Wines discounting operation.

It said that the upfront expenditure in Warehouse Wines, which will involve spending on marketing, resources and enlarging ranges, would hit profits during the first phase of the strategy.

However, the company believes the initial investment will eventually help it attain the revenue target, along with an adjusted earnings before nasties margin of 7 per cent.

Since the 2020 financial year, the London-based firm has listed on the London Stock Exchange, stayed debt-free, and seen its annual sales climb by 45 per cent.

Celebration: Online retailer Virgin Wines saw its pre-tax profits increase by a fifth to £1.3million in the six months ending 27 December

Jay Wright, chief executive at Virgin Wines, remarked: ‘The underlying business is performing well, and we have a unique business model as well as a dedicated and highly experienced team.

‘We look forward to executing this strategy to turbocharge Virgin Wines’ growth and deliver value for all of our stakeholders.’

Alongside this, Virgin Wines has unveiled a share buyback scheme to purchase up to 15 per cent of its share capital, together with resilient half-year results.

It revealed turnover dipped to £34.1million in the six months ending 27 December as a smaller customer base at the start of the financial year dampened first-quarter sales.

However, revenue recovered strongly over the festive season, rising by 9 per cent in December, a monthly record for the company outside the Covid-affected period.

Demand also benefited from significant growth in its commercial arm, whose sales jumped by 17 per cent thanks to partnerships with the likes of Ocado and Moonpig.

Virgin Wines also saw its earnings before nasties flatline at £1.6million and its pre-tax profits increase by a fifth to £1.3million due to finance income more than doubling from £161,000 to £372,000.

This was despite elevated paper and energy costs and a higher National Living Wage affecting its warehouse and customer service staff.

Wright said: ‘I am pleased to report a positive first-half performance, with the business delivering encouraging results, particularly during the peak Christmas trading season.’

‘Our strategy of acquiring high-quality customers at an industry-leading low cost per recruit, while maximising the quality and value of our wines through our unique open-source buying model, continues to position us well to navigate market headwinds.’

Virgin Wines UK shares plummeted by 9 per cent on Wednesday morning before recovering to be just 2 per cent down at 48p by the mid-afternoon.